Washington’s Department of Labor & Industries (L&I) has approved an increase to the state’s workers’ compensation premium rates by an average 12 percent or 6.5 cents per hour for 2011.
The new rates already took effect on Jan. 1 on an emergency basis while the state held public hearings on the matter. Individual employers could see their rates go up or down, depending on their recent claims history and any changes in the frequency and cost of claims in their industry.
“I know that many businesses are running on thin margins,” said L&I Director Judy Schurke. “That is why the Governor and I decided to use $117 million from the trust fund reserves to offset the costs of claims and keep the rate increase as low as possible.”
The 12 percent increase will bring in an additional $196 million and when combined with $117 million from the reserve funds will provide the additional $290 million needed to cover workers’ comp costs in 2011, L&I said.
Schurke noted that steps by L&I to hold down medical and pharmaceutical costs, streamline claims management, and fight fraud saved more than $200 million last year.
Like other workers’ comp insurers in the U.S., Washington’s system has been impacted by the recession, L&I said.
“In addition, we have been studying trends that are also driving up costs,” added Schurke. “As a result, Gov. Gregoire is proposing legislative changes. If passed by the Legislature, these changes will save $720 million over the next four years while improving medical care and employment opportunities for injured workers and ensuring stable and predictable rates for the future.”
Washington’s workers’ compensation system is made up of three funds that provide benefits when workers are hurt on the job. The Accident Fund rate increased 29.8 percent. Employers pay premiums into this fund. The Medical Aid Fund rate decreased 10.3 percent, and the Supplemental Pension Fund rate increased by 11.2 percent. Employers and workers contribute equal premiums into the latter two funds.
Washington is the only state where workers pay a substantial portion of premiums, about 24 percent of the 2011 proposed rate. Self-insured employers and their workers contribute to the Supplemental Pension Fund only.
Washington’s State Fund is the seventh largest workers’ compensation insurer in the country. It provides insurance to employers and workers at no profit; the money to pay claims comes from premiums and investment income. The State Fund does not get any money from state taxes that go into the state General Fund or from the federal government.
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